According to Kandahar deputy police chief General Salim Khan, the bomb exploded at the entrance to the Mullah Abdul Fayaz Mosque on Wednesday as people entered the building to pray at a funeral.
Afghan security sources said more than 46 were wounded in the blast.
Sohaib Safi, an AFP journalist who witnessed the blast said Kabul police chief General Akram Khakreezwal was among the dead, adding that an unknown assailant dressed in a police uniform had blown himself up immediately upon entering the building.
Safi also estimated that more than 20 people had been killed or wounded in the explosion that targeted the funeral of a Muslim cleric who was shot dead by suspected Taliban fighters at the weekend.
"There were some 50 to 60 people inside the mosque when the explosion occurred. This was a very big explosion, and there is blood everywhere in the mosque and outside it. Human limbs are scattered all over the mosque compound," the journalist added.
Precise casualty figures were difficult as many body parts and clothes were strewn around the building.
The explosion occurred inside the mosque in the centre of the city, during the funeral for Mawlavi Abdullah Fayaz - who was shot dead by suspected Taliban members because of his vocal support for President Hamid Karzai.
Body parts and clothes were
strewn around the building
Fayaz served as the head of the Islamic scholar's council,a government-appointed body, and criticised prominent Taliban leader Mullah Mohammad Omar at a recent gathering of clerics.
However, a Taliban spokesman said he knew nothing about the blast and none of his men had contacted him about it.
Kandahar was a stronghold of the Taliban government that was ousted from power in late 2001 by US-led forces for harbouring al-Qaida leader Osama bin Laden.
Taliban and other rebel groups opposed to Karzai's US-backed government have increased their activities in recent weeks after a winter lull with a series of bombings and other attacks.
US-led coalition forces and Afghan troops have hit back hard, killing nearly 200 suspected insurgents and capturing dozens more since March.